Marketplace - American Public Media
Here's an object lesson in why we still have to do stories about the financial crisis, almost six years after the collapse of Lehman Brothers:
Bloomberg conducted an interview with Angelo Mozilo, the former chairman of the board and CEO of Countrywide Financial, the biggest of the subprime lenders, and one of the leading men linked to the greatest economic crisis since the Great Recession.
He's kept a relatively low profile since the beginning of the crisis, but, because of a civil lawsuit pending against his name, took the interview in order to express his confusion as to why he and his firm have been seen as villains.
"No, no, no, we didn't do anything wrong," he said.
When nude photos of actress Jennifer Lawrence and other female celebrities hit the Internet, one of the first places they surfaced was a message board site called 4chan. It's a complicated place: a home for snark, nastiness — and, in recent years, political activism. The Occupy movement owes a debt to 4chan. And if you've ever shared one of these LOLcat photos, so do you.
The site was created in 2003 as a forum where people could discuss various interests, like Japanese comics, each within its own discussion board. Soon, for topics that didn't fit elsewhere, another board emerged: /b/.
"People always said, ‘If it’s too off-point, or it’s too crude, or just too much for the rest of the site, take it to /b/,'" says filmmaker Brian Knappenberger, who has made documentaries about the political activism that eventually grew out of /b/, including "We Are Legion: The Story of the Hacktivists."
The /b/ board remains an anything-goes environment, and is not remotely safe for viewing at work. Knappenberger calls it "extreme free speech."
"There’s a lot of awful stuff on there," he says. "I would highly recommend no one going to /b/ at all. And, of course, once I say that, everyone will want to go to /b/."
One thing that allows 4chan to be so anarchic is that everyone posting there is anonymous.
"There’s no real community to 4chan," says Austin Wilson, an engineer from North Carolina who says he's an occasional user. "There’s just a bunch of different people who go to this website, and they don’t really know who any of the other people are."
There are things that grew out of /b/, some of which filtered out into the rest of the world. One was LOLcats.
Another was the political group that calls itself Anonymous, which is known for shutting down corporate and government sites, often to protest privacy breaches. The group adopted the Guy Fawkes mask for public protests, which went on to influence the Occupy movement.
Gabriella Coleman, an anthropology professor at McGill University, studies 4chan and Anonymous. Her book "Hacker, Hoaxer, Whistleblower, Spy" will be published in November. She calls 4chan "the id of the Internet," and says it is full of contradictions.
"On the one hand, there is this value placed on privacy and shielding the self," she says. "But on the other hand, 4chan is an epicenter of violating people’s privacy by exposing people’s photographs."
Where business and 4chan overlap
Even if you've never visited 4chan or its notorious and popular /b/ image board, you've likely encountered their work elsewhere online, on your television, or even on the trading floor. Here are five of 4chan's biggest businesslike accomplishments, for better or worse:
They revived a pop star's career
The bait and switch is a classic internet prank, but it was perfected when folks began deploying Rick Astley's "Never Gonna Give You Up" in the place of an "amazing video!" or "'Lost' spoilers!" and so on. "Rickrolling," as it's now called, was pioneered on 4chan in 2007 and quickly hit the mainstream. Astley enjoyed a career bump — probably because the song isn't half bad — even participating in a live Rickroll by interrupting the Macy's Thanksgiving Day Parade. When 4chan founder moot (real name: Chrisopher Poole) made the "Time" 100 in 2009, Astley did the write-up.
They locked down at least one high school
Several 4chan users have seen criminal charges after threatening bombings or shooting sprees on the site. One post threatening a massacre shut down a Washington high school before investigators tracked the source to Sweden. Hoax shooting threats have also been traced back to 4chan users in Michigan and Australia.
A Wisconsin man was sentenced to six months in prison for threatening to detonate nuclear bombs at several NFL stadiums. The man's lawyer reportedly argued for leniency, saying of 4chan: "There's this odd community of people who go on this website. He's the poster boy of what can go wrong."
They (indirectly) created a profitable blog network and TV show
LOLcat is one of the best-known internet memes and maybe the quintessential one. The phenomenon was born on 4chan through a weekly ritual called "Caturday," but it had more legs than a typical image macro, spawning a successful blog network called Cheezburger and even a short-lived Bravo reality show following their employees.
They tanked Apple's stock
Years before Steve Jobs' real death, someone used CNN's citizen journalism platform iReport to spread a rumor that the Apple founder had been rushed to the ER with heart problems. The hoax, which reportedly originated on 4chan, was enough to spook investors and Apple stock briefly dropped by 10 percent, even more than it would dip the day after Jobs' actual death in 2011.
They put hackers "on steroids"
We could dedicate a whole list to the exploits of Anonymous, the loose collective of hackers that was born on 4chan and dubbed in one early, alarmist news report as "hackers on steroids."
These days, they're generally considered activists, though their causes — like their membership and methods — are fluid. They've taken down many, many websites and published many, many people's personal information, including addresses and social security numbers, in various protests. Some Anonymous affiliates have also stolen government data and, most recently, fingered the wrong Missouri police officer in the shooting of Michael Brown.
There’s a bidding war in the dollar store space. The target is Family Dollar, the stores with the mostly red logos. The courters: Dollar General, with the bright yellow letters, and its green-logo competitor Dollar Tree.
Dollar General, already rejected by Family Dollar, has increased its takeover price to $9.1 billion. If this fails, word on the street is it could pursue a rare hostile takeover.
At this point, Family Dollar has turned down the highest-priced offer.
“Just like in a family, if two families are trying to negotiate over marriage, and somebody comes with a slightly higher dowry, but you think the marriage might be better — or she’s actually in love with somebody different — you might not take the highest offer,” says Michael Goldstein, finance professor at Babson College.
At issue is the rejecting company’s board of directors. When the board says no, an acquiring firm can go around it. That’s what’s known as going hostile.
“What you’re doing at that point is you’re making an offer directly to the shareholders,” says former investment banker Donna Hitscherich, now at Columbia Business School.
By now, the acquirer is hostile to the board, yet making nice with the shareholders.
“The shareholders are the owners of the company,” Hitscherich says. “It’s their capital that’s been committed. So if they determine to sell, they can do that.”
The acquirer offers shareholders a certain number of dollars per share. If enough shareholders agree to sell, the takeover goes through.
There are risks. In a hostile case, a would-be takeover company is flying half-blind.
Securities lawyer Bill Caffee says, in a friendly deal, the two firms exchange lots of information and research.
“And if you’re going hostile, obviously you’re not,” Caffee says. “You’re just kind of shootin’ into the wind. And looking at their public filings and saying, ‘We think it’s worth X dollars and here we go for it.’”
Also, if word of a hostile takeover leaks out, hungry investors can push up the target’s stock price.
Since that’s how deals are valued, that ups the acquisition price.
American cities exported $1.4 trillion in goods and services in 2013, the Commerce Department reported Tuesday. That includes everything from manufacturing to secondhand goods, scrap, mining and agriculture.
Two states benefit most in dollars and in number of jobs from the export economy: Texas and California. That may not be a surprise, given the vast area and population in both places, but some of the cities showing growth from exports may be: Kansas City, Missouri; Youngstown, Ohio; Detroit.
Commerce Secretary Penny Pritzker joined Marketplace's Kai Ryssdal to dig into the findings.
What kinds of jobs are being created by exports?
Of the goods jobs, 88 percent of them are manufacturing jobs that are created. Those are good jobs. But in general, the exporting jobs that are being created pay 13 to 18 percent more than the average job. We're very excited about that, and 1.6 million Americans have new jobs since 2009 because of exports.
I ask this question against the backdrop of an economy growing at 4.2 percent on an annualized rate, we learned last week...
Isn't that exciting?
It's great news, but here's the thing, to your report: You can't export your way to growth, right? Because everything we export, somebody else has to buy. With the dollar at highs and with slowdowns in Europe and Asia, how confident are you that this export-led growth can continue?
I am confident. We have doubled exports to over 30 countries around the world. There are a lot of countries that want our goods and services, and one of the things we want to do is help our companies export, because that'll continue to support the kind of GDP growth we've been seeing.
One of the things that happens when exports are a topic of conversation is that the Export-Import Bank comes up, that government agency that helps finance exports for a lot of American companies. There's a great political brouhaha right now in Washington over whether to renew the charter when it comes due. Why do we need the government to be helping in this way?
It's absolutely imperative that we reauthorize the Export-Import Bank, and I'll tell you why. Sixty other countries have export-import banks. The Export-Import Bank over the last five years has supported the creation of 1.2 million jobs in the United States. We can't afford not to have this tool in our tool chest.
Speaking of who is doing these jobs, last time we spoke [January 2014], I asked you about the prospects for immigration reform. You said you were confident it would be done in the first half of this year. I'm going to give you the opportunity for a Mulligan here, Madam Secretary.
Well, the reason for supporting immigration reform has not gone away. First of all, we have a moral responsibility to deal with the 11 million undocumented individuals living in our country. But we also have an economic opportunity that comes with immigration reform.
If you look from a more technology and STEM standpoint, we know that over 50 percent of students in most STEM fields that are getting a master's or Ph.D. are immigrants. So this is crazy. We're educating all these terrific young people, they're here in the country. If they want to stay, why shouldn't we encourage them to stay? It would be good for our businesses, too. They need this kind of talent. I know where we're at, but I believe that pragmatism and the reality will win out [...] and that we will get some kind of action on immigration reform.
I won't ask you to speak for your boss, but do you anticipate that action to be executive action from the White House, most likely after the election?
Well you know what, since you hang out with my boss, I'll let you ask him that question.
Indian Prime Minister Narendra Modi marks his first 100 days in office today, a period that offered high hopes for a pro-business administration.
"His election was indeed a time of great optimism, and I would say that not much has changed. A lot of that optimism continues to be," says Sruthijith KK, editor of Quartz India. "There is some concern that he hasn’t done enough, but there are enough indications that he is laying the groundworks slowly and steadily to be able to then leapfrog and do much bigger things."
KK says Modi plans to put a think tank in place to help figure out how the economy needs to be structured, and the different ways the states and central government can share revenues. However, that plan has not been established yet.
Listen to the full interview in the audio player above.
Former House Majority leader, Republican Eric Cantor, lost a June primary to a Tea Party conservative in a surprise upset.
According to the Center for Responsive Politics, two thirds of former members of Congress end up in the lobbying business. Cantor, however, is doing something slightly different.
He will be vice chairman at boutique investment bank Moelis and Co. He will also be a managing director, and a member of its board.
What, though, will he be doing?
“Strategic counsel,” according to the firm’s announcement. Cantor comes from a real estate law background, so he won’t be bringing a deep expertise in mergers and acquisitions, for example. But politicians do, it turns out, have skills.
“A politician is a very smart hire,” says Jeanne Branthover, managing partner with Boyden Global Executive Search. “Politicians are very strategic, they’re always looking into the future and looking at what should we do, what shouldn’t we do, what should our image be, our message, our brand."
A politician like Cantor also brings a Rolodex.
“When you think about an investment bank, so much of what they do is wealth and connections, and politicians are connected at very high levels and very important circles,” says Branthover.
“Money is a commodity, access and influence are not,” says Josh Crist, managing director at Crist Kolder Associates, an executive search firm. “Guys who have grown up on the investment side can access money, but may not be able to open the doors that a guy like Cantor can.”
So, for example, if Company A wants to expand by taking over Companies B and C, they might lean on Cantor to work any connections there.
“He’s seen C level, board level access for years given his fundraising responsibilities,” says Crist.
Cantor raised $1.4 million over the past two years, including $5,200 for his own campaign from his new boss, the founder of Moelis and Co, since April 2013.
First up, there's a lot of data this week. The most recent indicator is the Small Business Jobs Index. It seems small business hiring has slowed slightly. Today, we talk about the prospects for economic growth as we head into the fall. And when Eric Cantor was in congress, he was well-liked on Wall Street. The former House Majority Leader raised a lot of money from folks in the financial services sector. Soon, he'll join their ranks. Plus, Facebook says eighty-one percent of its "daily active users" are outside the United States and Canada. The social media giant is huge in India. It has well over a hundred million users there. And, it's growing. India could surpass the U.S., as Facebook's top market as early as next year. As it focuses on expanding in emerging markets, Facebook has a new advertising tactic, and it involves the strength of cell phone signals.
All this week, Marketplace Tech is taking a closer look at technology and the ways in which it influences how we read.
Already, Marketplace Tech host Ben Johnson has spoken with Marketplace's LearningCurve reporter Adriene Hill on how tablets are being used in schools as education tools, and author Jason Boog about his new book, "Born Reading: Bringing Up Bookworms in a Digital Age."
But how has technology changed the way adults read? Well, as you might expect, the answer is complicated.
Click the media player above to hear Marketplace Morning Report guest host David Gura in conversation with Marketplace Tech host Ben Johnson.
This week, the National Institutes of Health begins testing an Ebola vaccine in humans. Given the need to quickly stem the deadly outbreak in West Africa, global health officials hope to push a vaccine to market.
While there's currently a market for an Ebola vaccine, it’s small, and Ebola isn’t a disease that keeps popping up year-after-year.
“It’s not all about economics,” says Dr. Carlos Del Rio, chair of the Department of Global Health at Emory University. He says developing the vaccine is also about building good PR for a company. “There’s a value to that publicity, right?”
Right, says Kenneth Kaitin, director of the Center for Drug Development at Tufts University. But Kaitin says there is also the potential for a huge payoff, especially for smaller companies.
Think of it as a pharmaceutical version of “Cap and Trade.”
“A program that the FDA put in place several years ago gives a priority review voucher to any company developing a product for a neglected or tropical disease,” says Kaitin.
Ebola is a perfect example. That pharma company can sell the voucher to another drug maker. The “golden ticket” gets the purchaser a fast track to federal regulators for any other drug in its portfolio.
One voucher recently sold for more than $67 million.
The social media giant Facebook has well over 100 million users in India, a nation that could overtake the U.S. as the top Facebook market as early as next year.
To capitalize in emerging countries like India, Facebook is now providing advertisers with data on cell reception and connection. The information helps match ads to user technology. For example, Coca Cola could send a video ad to people in cities with 4G LTE, or turn it into a text ad for people in rural areas where connections are spotty and data networks are limited.
It’s a way to help advertisers better reach the population they’re addressing, says Anne Nelson, who specializes in international media development at Columbia University.
This is important because most users in places like India are on pay-as-you-go data plans, says Nathan Eagle, the CEO of Jana, a mobile marketing platform.
“Advertising for most people in these emerging markets ultimately is taking money out of their pockets,” he says.
With over a billion potential Facebook users in India, that's probably not the best way to make a first impression.
Can tablets and apps help children learn to read? It feels like a simple question, but the answer is complicated.
For starters, technology is moving fast, and there hasn't been time for solid scientific consensus to develop on whether and how devices like tablets should be used to help children improve their reading skills.
That hasn't stopped school systems around the country from buying in, and we heard this week about tablets in schools from Marketplace's LearningCurve reporter Adriene Hill.
But beyond schools and teachers, what about parents who want their children to have top notch reading skills in a changing environment?
Jason Boog is the author of "Born Reading: Bringing Up Bookworms in a Digital Age." Boog says that there is some agreement in the scientific community on a few important points.
Click the media player above to hear Jason Boog in conversation with Marketplace Tech host Ben Johnson.
One thing neuroscientists seem to agree that kids shouldn't be playing with tablets and smartphones until they're over two years of age. Another is that whatever apps or technology we use to try and improve our kids' reading skills, there is no real alternative for a real human being reading with and to a child.
If you remember Augustus Gloop, Veruca Salt and Willy Wonka, and of course our hero, Charlie Bucket from "Charlie and the Chocolate Factory," then I have some good news for you.
No, not a golden ticket. A lost chapter of Roald Dahl's classic book has been published by the English paper The Guardian.
In the lost chapter, the children go into the chocolate factory's vanilla fudge room and its rather violent cutting and pounding room. Not all the kids make it out.
You can also catch glimpses of some early character sketches and Dahl's trademark dark humor.
The paper says it was deemed too wild and subversive 50 years ago.
Tracing the parentage of a 1957 Chevy is not easy, but for Earl Swift, author of Auto Biography: A Classic Car, An Outlaw Motorhead, and 57 Years of the American Dream, it became an obsession.
"I met Tommy Arney in 1993 when he was running a go-go bar in Virginia," says Swift.
Swift was, at the time, a newspaper reporter for the Virginian Pilot. He went to Arney’s go-go bar to interview him about a court battle he was in. Swift says he walked out of that interview very impressed with Arney.
"He had an intelligent humor that stayed with me for years afterwards," says Swift.
He met the 1957 Chevy eleven years later.
"Having driven a succession of beaters in college and throughout my twenties, and wondering often back in those days what the cars had been like when they were new and actually functioned as intended," says Swift. "I decided it would be an interesting newspaper story to find an old car and try to trace it back to everybody who had owned and try to tell a bigger story; something about America or about the region or the state through this one car and this otherwise unconnected fraternity of people who had shared it."
Swift tracks down the thirteen individuals who owned the ’57 Chevy, and uncovers the story of Tommy Arney, the thirteenth owner, whose mission was to rescue the car from ruin.
When Jamaad Reed started his job as a cashier at a Walmart near Cincinnati, he made $8.15 an hour. That was two years ago. Since then, he has seen a couple of raises, which have meant his wage has kept up with inflation — but just barely. As of March of this year, Reed was making $9.05 an hour.
“I'm stuck,” he told me recently. “You know what I'm saying? I feel like I'm stuck in the same spot.”
"Stuck" is a pretty good word to describe wages for most American workers over the last few decades. Not just in the case of lower-wage workers like Reed, but all along most of the income spectrum, except for those at the very very top.
In fact, most American workers have seen little to no growth since the late 1970s, if you adjust for inflation, according to Elise Gould. She's an economist with the Economic Policy Institute and author of a new study that analyzes wage data from census surveys over the last several decades.
That's not to say that individual workers haven't seen gains. But, says Gould, “as productivity has continued to rise, typical workers’ wages simply have not.”
That’s a very different economic picture from a half century ago. In the first few decades after World War II, as the nation's productivity grew, so did wages. So what happened?
“This is one of the questions that people are arguing about right now,” says Linda Barrington, the executive director of the Institute of Compensation Studies at Cornell University.
Barrington says some economists point to a loss of worker bargaining power, meaning workers are less able to claim growing productivity gains in the way they could when labor unions were stronger.
Others blame a shift in business strategy over the years to one that focuses more on shareholder returns, “as opposed to sharing the returns and the gains to all of the employee base,” says Barrington.
Meanwhile, technological advances and globalization have meant there are fewer middle-wage jobs to be had in the U.S. Now, workers who in a previous era might have had relatively well-paying manufacturing or clerical jobs, have to settle for lower-paying jobs in the service sector instead.
Even as economists debate the reasons behind American workers’ stagnating wages—one thing is certain. They don’t just affect individual wallets, but the economy as a whole.
As Barrington points out, “every worker is also a consumer.” And consumers are what drive the modern American economy.
Take a city with half a million people and double its population overnight. It happens each August in Edinburgh, Scotland.
"The Festival City" is currently hosting the biggest arts festival in the world. It's such a phenomenon it's spawned copycats including one in Hollywood.
Spectators stand shoulder to shoulder along the Royal Mile as it snakes its way down from Edinburgh Castle to Holyrood Palace. Street performers from all corners of the world vie for just a bit of your attention.
"It's 3000 different shows, all of which run pretty much every day for 25 days. If you went to see every show, it'd take you 3 months," says Neal MacKinnon, the Fringe Society's Head of External Affairs.
And that's assuming you don't take time to eat or sleep. According to MacKinnon, it just keeps growing.
"This year we are 10 percent bigger than we were last year," he says.
Edinburgh is packed in August. Buses take twice as long. Temporary help wanted signs hang in store windows, and once comfortable pubs don't even have room to stand. T-shirt screen printer Norm Richardson tells me he's been buried with orders.
"August is a nightmare to be honest," says Richardson, "As early as you can get in till as late as you can be bothered working. Days and days stretching into the future, like the end of Raiders of the Lost Ark, where there's just boxes going off into infinity."
The festival supplies 15-20 percent of his yearly volume. Kat Brogan of Mercat Tours says it's hard to keep a tour group's attention with so many other things going on.
We get clever. So we nip down wee streets and closes and alleyways to make sure that the guides can be seen and heard," Brogan says.
Some hotels have been completely booked since January, "And their prices go up exponentially as well," MacKinnon says.
Neil MacKinnon from the Fringe Society says accommodations are hard to come by, but the people who live here have found ways to cash in on the problem.
"There is a long tradition of thousands of Edinburgh residents vacating the city for the month of August," he says. "They rent out their flats, which are occupied for the month."
Some apartments require tenants to move out for the month of August. Fringe University's Andrew Jones says some students he helps place are charged three months rent for their one month stay.
"Edinburgh in August brings out the Adam Smith in everyone," says Jones.
He means Adam Smith, the "Father of Capitalism," who might be proud of his hometown today. But one group that's left out of the windfall? The artists who perform. Jones recalls a conversation he had with a theatre company at the festival.
"We've got a budget of 120 thousand dollars, and we plan to make about 20 thousand back on the box office," Jones says.
While businesses profit from the festival, Neal MacKinnon says theatre companies? Generally don't.
Most companies will either break even or not make a profit," MacKinnon says. "They are here because it's an investment in their career."
A long term investment that might never pay off. Screen printer Norm Richardson is skeptical about the likelihood of being discovered .
"It's just a bit harder now to get people to kind of notice you," says Richardson, "'cause everyone's fire eating and juggling on a unicycle, so how do you choose which unicycling fire eater to go and see when there's so many?"
Undaunted, the festival continues to grow, as each year more artists come to chase their dream here in the Scottish Capital.
It’s a little more than a week to go until Apple’s next big press event, and the hype is mounting.
Apple is expected to introduce its new iWatch. And if that’s not enough, there's buzz that Apple will also announce that its new iPhone will be an iWallet. Several news outlets said Apple has done deals with American Express, Visa and Mastercard to make this happen.
But what if Apple doesn't produce an “insanely great” product, as Steve Jobs was fond of saying. Three years after Jobs' death, consumers and investors are asking whether Apple can keep churning out products that hit that mark?
“Some of those expectations may be close to phantasmagorical,” said Charles Byers, ca marketing professor at Santa Clara University.
Trip Chowdhry, an analyst at Global Equities Research, said Apple just needs to ignore the noise. When it comes to the smart watch - or any new product - he said Apple needs to focus on what it does best.
“Apple just has to go back to its roots,” Chowdhry said. “What do they do? Less is more. Make it so easy that anybody can use it. Your grandma can use it.”
Chowdhry said there are already a lot of smart watches out there, with plenty of bells and whistles. But they’re difficult to use and mostly it’s tech geeks who are into them. He said Apple’s magic is in taking existing technology and making it intuitive, simple and universally desirable.
James McQuivey, an analyst at Forrester, said that if Apple doesn’t introduce a breakthrough product soon, the chatter that the company may have lost its mojo will grow even louder.
If they can’t do something momentous by the end of 2014, McQuivey said, investors will conclude that Apple’s days of being an "insanely great" company are behind it.
Labor Day is a day to honor the American worker. And a day, if retailers have their way, for us to go shopping.
So it’s no surprise that there are companies out there, like Walmart, advertising goods that are “Made in the USA.” Walmart says that when customers are deciding what to buy, where a product was made is second only in importance to how much it costs.
“Made in America is a very important consideration for many Americans,” said Michelle Amazeen, an advertising and legal studies professor at Rider University.
There’s a perception, she said, that goods made here are better quality. And that buying those goods will help keep jobs in the country. “It is a very powerful label,” she said.
But if you want to put those four words "Made In The USA" on your product, you’d better mean it.
“If a marketer wants to make an unqualified “Made in the USA” or other U.S. origin claim, the marketer needs to have substantiation that product was all, or virtually all made in the USA,” said Julia Solomon Ensor, an attorney with the Federal Trade Commission.
The FTC has published a 37 page document outlining the standard.
It says that a lovely lamp that is assembled in the America, with American-made brass, and an American-made lampshade, but an imported base, doesn't qualify for the label "Made In The USA."
The FTC will go after companies that don’t follow the rules.
“A lot of companies try and wordsmith their way around the law,” said Bonnie Patten from TruthinAdvertising.org.
Look carefully and you'll see labels saying things like “Designed in the USA,” “Made with U.S. labor,” or even “Made in the USA with imported parts.”
If you want something truly, fully “Made in the USA” — you’re going to need to read those patriotic labels closely.
Every year about 600,000 new businesses open in the United States. Only about half make it past the five-year mark. But of course, that doesn't stop people from trying.
In the early 2000s, Jim Picariello was confident that he had the next great natural foods idea. Just a couple of years before, he and his wife, Jill Day, had moved to a tiny town in Maine. They had just survived the dot come crash and wanted a more peaceful and sustainable lifestyle in rural Blue Hill, Maine. They even built their own home.
After a year of decompressing, Jim woke in the middle of the night with his new product epiphany: Frozen tea pops.
While sitting at his dining room table, he would always make himself a mason jar full of green tea, sweetened with honey, that he would drink while he worked on his laptop. He invariably made too much tea, and would pour the leftovers into a popsicle mold, to freeze and enjoy later. The tea pops were delicious and maybe, profitable.
Picariello quickly raised $25,000 to test recipes and develop his product idea. Before he and his family even realized it, they were starting a new business: Wise Acre Inc.
"When I said go ahead I really didn't feel like we are starting a business," recalls Picariello's wife, Jill Day. "I think that's probably one of the reasons why it even happened, is that I wasn't really aware that that's what we were doing."
The timing was not ideal for the young family: they had a young daughter and a second on the way. But once Picariello began product development, there was great enthusiasm for his idea, and a series of opportunities unfurled in front of him.
In 2007, he took his "Frosteas" and "Frostbites" to the influential Natural Products Expo East trade and was awarded Most Innovative Product, and walked away with a substantial distribution deal.
Quickly he went from making his tea pops in tiny saucepans in his kitchen to needing his own factory and employees. For a while his tea pops were in about 800 stores up and down the East Coast. But it wasn't sustainable, because at that point there weren't enough consumers and his products were languishing in the frozen food aisles. Picariello needed assistance with marketing and advertising, as well as a way to fund production with shrinking resources.
Picariello looked for and found a potential investor, who agreed to a million-dollar deal. The backer advised him to expand quickly and to invest in both production and promotion.
"'Get ready, your first summer is about to kick off,'" Picariello says he was advised. "'Go buy some equipment, cause you're going to make this stuff faster.' So that's exactly what I did. Like an idiot."
Jim immediately invested in some large items, including a pricey blast freezer. He quickly went through money he didn't have and after two weeks there was still no check from the billionaire.
"Turns out a couple days after our meeting, the billionaire, tasted our product and said, "oh I can't imagine why kids would like these." And of course it's not a product for kids, it's a product for adults, and kids do like them."
The prospector investor backed out of the agreement.
"And so at this point I'm sort of doing the math in my head over and over," Picariello recalls. "I have this much money, we have this much payroll, we have this much rent, we have this much electricity. All that over and over and over again."
To keep the business afloat, the family went so far as to start putting payroll on their personal credit card. Without an influx of cash, Wise Acre Inc. couldn't last.
"It was just like, I now have no more money, I have to lay all you people off. And it was very sad."
The bank seized the equipment and the factory closed. Their debts went unpaid, and Picariello declared bankruptcy, of somewhere around half a million dollars.
"We're still dealing with the ramifications," Jill Day laments. "To have the kind of significant debt now that we have because of the business tanking is just like the worst thing that could have happened."
Today, the couple has paid off some of their debts, and Picariello now has a steady full time job. Despite what happened with Wise Acre Inc., Picariello says he might still have one more new product idea to try, but promises it will be much less risky.